Correlation Between CapitaLand Investment and Q2 Holdings

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Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Q2 Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CapitaLand Investment and Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and Q2 Holdings, you can compare the effects of market volatilities on CapitaLand Investment and Q2 Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CapitaLand Investment with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Q2 Holdings.

Diversification Opportunities for CapitaLand Investment and Q2 Holdings

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CapitaLand and QTWO is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and CapitaLand Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CapitaLand Investment Limited are associated (or correlated) with Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Q2 Holdings go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Q2 Holdings

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Q2 Holdings. In addition to that, CapitaLand Investment is 1.14 times more volatile than Q2 Holdings. It trades about -0.01 of its total potential returns per unit of risk. Q2 Holdings is currently generating about 0.22 per unit of volatility. If you would invest  7,619  in Q2 Holdings on September 17, 2024 and sell it today you would earn a total of  2,942  from holding Q2 Holdings or generate 38.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.46%
ValuesDaily Returns

CapitaLand Investment Limited  vs.  Q2 Holdings

 Performance 
       Timeline  
CapitaLand Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Q2 Holdings 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

CapitaLand Investment and Q2 Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CapitaLand Investment and Q2 Holdings

The main advantage of trading using opposite CapitaLand Investment and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, Q2 Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.
The idea behind CapitaLand Investment Limited and Q2 Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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